Iceland’s Icons

Iceland's leftback Gudjon Valur Sigurdsson (C) jumps to shoot during the men's preliminaries Group A handball match Tunisia vs Iceland for the London 2012 Olympics Games on July 31, 2012 at the Copper Box hall in London.

“Eees-laand! Eees-laand! Eees-laand!” a smattering of fans chanted as the Icelandic handball team put the finishing touches on its 31-25 win over Argentina in the opening game of the Olympic tournament. After the horn sounded, the teammates exchanged hugs and high fives and waved toward Olafur Ragnar Grimsson, the silver-haired President of the volcanic North Atlantic island nation. He applauded back, beaming.

As Grimsson filed out of the arena, he stopped for an impromptu interview. Some heads of state, it seems, are a bit more accessible than others. We start talking about the impact of this team in Iceland. “Handball, for us, has become not just a sport but the core of the national spirit,” Grimsson says. Can anyone honestly say the same about any single U.S. Olympic team? No way. “I’m here not just as a great fan of the team,” says the Icelandic President, “but to also pay homage to what they’ve done.”

No group of Olympic athletes is more crucial to a nation’s psyche than the handball team from Iceland. Handball—essentially soccer but using hands instead of feet to fire a ball past a goalie—doesn’t register in the U.S. or many other countries outside Europe. In Iceland, however, the sport is a national obsession. In 2008 the team delivered the greatest sports moment in the nation’s history: a surprise silver in Beijing, losing to France in the final. Iceland became the smallest country ever to medal in an Olympic team sport. Some 40,000 people welcomed the team home in Reykjavík.

A few weeks after this euphoria, Iceland’s economy cratered, one of the most spectacular crashes of the global financial crisis. “We had this extraordinary contrast,” says Grimsson. The country’s three biggest banks, taking advantage of European deregulation, had amassed assets that were nearly 10 times the country’s GDP.

As the global markets fizzled, the government let the overextended banks fail. The value of the national currency, the krona, sank. The stock market dived, and inflation skyrocketed. In September 2008, Iceland had a 2.6% unemployment rate. Just eight months later, unemployment was at 11.2%. Few countries had fallen so far so fast.

During those terrible times, the sport served as a welcome diversion. “People would tell me, ‘I don’t have any money,’” says Asgeir Orn Hallgrimsson, an Icelandic player, “but I have handball.” In January 2010, with unemployment hovering near 8%, Iceland won another surprise medal: a bronze at the 2010 European championships. The country’s struggles motivated the team. “We wanted to do a good job for our nation,” says Gudmunder Gudmundsson, Iceland’s coach. “We were thinking about this, because a lot of people had a hard time.”
Iceland’s economy has bounced back. Unemployment is down to 5.2%, and GDP is growing at its fastest pace since before the collapse. Iceland repaid $900 million in loans to the International Monetary Fund in March and an additional $483.7 million in June.

Grimsson, who on June 30 was elected to a record fifth term as President, sticks by Iceland’s choice to let the banks fail and suffer the consequences. He and other Icelanders give handball credit for the comeback too. “A nation, after an initial shock, decided to move forward,” says Grimsson. “And the handball team played a big role in that.”

Iceland beat Tunisia 32-22 in its second game, and it has a shot at another medal. As the President is leaving the arena, I ask him if he has any final thoughts. “My last word to the American audience is to start playing handball,” Grimsson says. “It’s a fun game.”